How Can Bankruptcy Help With a House Foreclosure?

Foreclosure of real estate is sometimes a tough situation to figure out. Should I try to stop the foreclosure and save my house? Should I let the foreclosure proceed? What happens to a second mortgage? What are the possible tax implications?

Here is the key: Meet with an experienced bankruptcy attorney to find out your options before you make any major decisions. You may also need to meet with your tax professional as well before you have all the pieces to the puzzle.

Chapter 13 and foreclosure

Chapter 13 may help an eligible homeowner stop a pending foreclosure and catch up on missed mortgage payments through a court-approved plan, usually lasting three to five years. Keeping the home also requires making ongoing mortgage payments and meeting the plan’s requirements. Filing generally starts an automatic stay, but exceptions, prior bankruptcy cases and court-ordered relief can limit that protection. Filing does not guarantee that you will keep your home. If a foreclosure sale is scheduled, seek advice promptly because the stage of the foreclosure and filing deadline matter. Sources: 11 U.S.C. § 362(a)–(d); 11 U.S.C. § 1322(b)(5), (c)–(e).

If bankruptcy sounds drastic, consider the impact a foreclosure and possible tax consequences.

Chapter 7 and foreclosure

Chapter 7 generally starts an automatic stay that may temporarily stop a pending foreclosure, subject to exceptions and possible court-ordered relief. It does not provide a Chapter 13 repayment plan to catch up on missed mortgage payments or guarantee a set period to remain in the home. A Chapter 7 discharge may eliminate personal liability for a mortgage debt, but ordinarily does not remove the lender’s lien. A lender may still foreclose when permitted by law. The loan, sale status, exemptions and bankruptcy history need review before deciding whether Chapter 7 is appropriate. Sources: 11 U.S.C. § 362(a)–(d); U.S. Courts: discharge in bankruptcy.

Official bankruptcy resources

Discuss your foreclosure options

There is a lot to consider in making the decision. Meet with an experienced bankruptcy attorney for free to find out your options.

Over the past 34 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situations. We can review whether bankruptcy may help stop your garnishment and address your debts through a repayment plan. Sources: 11 U.S.C. § 362(a)–(d); U.S. Courts: Chapter 13 bankruptcy. If money has already been garnished, recovery may be possible in some cases, depending on the timing of the transfers, applicable exemptions and other legal requirements. A refund is not automatic or guaranteed. Sources: 11 U.S.C. § 547(b)–(c), (e)–(g); 11 U.S.C. § 522(g)–(i); 11 U.S.C. § 550(a). But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.